The Scooter Store cuts 150 more jobs

The Scooter Store operates its headquarters out of New Braunfels. The compnay announced it is cutting 220 of its workforce.

Photo By Tom Reel / San Antonio Express-News

The Scooter Store, based in New Braunfels, blames the layoffs on changes in the way the Centers for Medicare and Medicaid reimburses for electric scooters and power chairs.

Photo By TOM REEL/SAN ANTONIO EXPRESS-NEWS

BUSINESS The Scooter Store Headquarters in New Braunfels is surrounded by parking spaces for its 1400 employees. Tom Reel/Staff February 18, 2009.

Photo By Robert McLeroy/SAN ANTONIO EXPRESS-NEWS

BIZ -- FOR TRAVIS POLING -- SCOOTER STORE -- Doug Harrison started The Scooter Store in New Braunfels 10 years ago. The New Braunfels company now takes in $200 million a year from sales in 22 states. Thursday June 28, 2001 in New Braunfels, Tx. Photo by Robert McLeroy.

Photo By TOM REEL/SAN ANTONIO EXPRESS-NEWS

The Scooter Store Headquarters in New Braunfels is surrounded by parking spaces for its 1400 employees. Tom Reel/Staff February 18, 2009.

Photo By Robert McLeroy/SAN ANTONIO EXPRESS-NEWS

BIZ -- FOR TRAVIS POLING -- SCOOTER STORE -- Doug Harrison started The Scooter Store in New Braunfels 10 years ago. The New Braunfels company now takes in $200 million a year from sales in 22 states. Harrison and wife Susanna in special painted car in front of new facility under construction. Thursday June 28, 2001 in New Braunfels, Tx. Photo by Robert McLeroy.

The Scooter Store on Friday said it has eliminated about 150 jobs at its headquarters and distributions centers around the country.

The New Braunfels-based provider of scooters and power chairs blamed the cuts on “fundamental changes” by the Centers for Medicare and Medicaid Services, known as CMS, in “claims processing procedures and reductions in reimbursement amounts.”

“While we regret having to take this action, we believe this restructuring will help the company operate more efficiently so that we can be confident in our future,” Scooter Store CEO Martin Landon said in a statement.

About 100 of the positions eliminated on Friday were at the company's headquarters.

The reductions follow the termination of 220 employees in September. Those cuts represented less than 10 percent of the Scooter Store's workforce, which was reduced to about 2,100 at the time, with about 1,400 employed at the company's headquarters.

Since then, the Scooter Store said it has had a seasonal decline in its workforce, which, when factoring in the latest layoffs, now stands at about 1,800 people.

In May, a management shakeup led to the departure of about a dozen executives. Company founder Doug Harrison, its longtime chairman and CEO, left the company in March.

Company officials have been grappling with changes instituted by CMS last year. Power-mobility devices have come under scrutiny as part of a crackdown on Medicare fraud. Specifically, there are concerns the devices are being prescribed to people who don't need them.

A CMS official previously has said that more than 80 percent of power wheelchair claims did not meet Medicare's coverage requirements.

Last summer, CMS implemented a three-year demonstration program that requires durable medical equipment providers to get “prior authorization” from Medicare before patients living in any of seven states receive a scooter or power wheelchair.

Those states are Texas, California, Illinois, Michigan, New York, North Carolina and Florida. The states have “high populations of fraud- and error-prone providers,” CMS said in a statement in August.

The American Association for Homecare said in a statement this week that Medicare reimbursements for a variety of home medical equipment will drop an average of 45 percent starting July 1.

“Better aligning our costs to the new realities within the powered mobility durable medical equipment category will allow us to effectively implement our growth initiatives,” Landon said about the layoffs.

Spokesman Tim Zipp said in an email that the Scooter Store it is putting more focus on its “new company vision of helping seniors age gracefully in the home.”

“The company intends to provide additional products and services to aid its customers and promote safe and healthy living,” he said, without detailing plans.

“By doing this, the company can help its customers to continue living at home and not have to enter expensive institutional care, while at the same time, expand its revenue and payer sources,” Zipp said.

Recently, an independent auditor found the Scooter Store received anywhere from $46.8 million to $87.7 million in Medicare overpayments from 2009 to 2011. The company, however, only has to repay $19.5 million.

Two U.S. senators in December sent a letter to CMS asking why it agreed to accept an amount “significantly less” than what it overpaid the Scooter Store.

In a Jan. 22 reply, CMS said it accepted the amount based on the Scooter Store's analysis of the auditor's report.

The company was given five years to pay back CMS, though the agency said the agreement doesn't absolve the Scooter Store from further liability related to the billed claims.

Workers issued pink slips on Friday will receive severance packages, the company said.